Why Manchester needs more than trickle-down economics

New research on manufacturing in the region suggests growth doesn’t always translate into more jobs and better pay.

This article originally appeared in the New Statesman. 

Despite sounding like the title of a 1970s sci-fi novel, Atom Valley is the 2023 plan for levelling up Greater Manchester and addressing its socio-economic divisions. But while the prescription may be new, the malady of Greater Manchester’s inequality is long-standing, with stark differences in health, well-being, employment, pay and skills across its localities. The city-region’s combined authority hopes to address these divisions by building a hub for innovation in advanced materials, manufacturing and green technologies. Doing so could, we are told, create 20,000 jobs across three separate sites in Bury, Rochdale and Oldham.

“Atom Valley has the potential to turbocharge the city region’s economy from within”

This is positive news and points to an even bigger opportunity. With a new industrial strategy for Greater Manchester – one that harnesses the economic demand created by large public sector organisations – Atom Valley has the potential to turbocharge the city region’s economy from within.

That’s not the current plan though. We are told, instead, that benefits will simply trickle down to the residents of Bury, Rochdale and Oldham if Atom Valley is able to attract two or three big international companies. But Greater Manchester’s leaders should be careful what they wish for. Trickle-down economics is a theory that has been widely discredited – from the Labour front bench to Joe Biden’s White House, politicians have begun to realise that the proceeds of growth don’t always spread through communities in the form of higher pay, better employment or reduced deprivation. If the last 70 years of globalisation has taught us anything, it’s that big international companies don’t always stick around. Jobs can be easily offshored to maximise shareholder returns, with devastating consequences for local people.

“growth has not necessarily translated into substantive local benefits”

Like many other places across the UK, past economic development in Greater Manchester has been largely dictated by a growth at all costs strategy. Yet, that growth has not necessarily translated into substantive local benefits. Despite recent increases in foreign direct investment, deprivation is still getting worse. As with other local economies across the UK, Greater Manchester is still struggling to escape the prevalence of low-paid, insecure jobs.

Illustrating this point, analysis by the Centre for Local Economic Strategies has revealed that while manufacturing growth has increased and profits have almost doubled in Greater Manchester since 1998, compensation for employees has not followed suit, rising by only 19 per cent in the same period. Meanwhile, the total number of jobs in the sector has declined, particularly in skilled trades.

There has been a suggestion that Atom Valley should look to emulate the success of Salford’s Media City, which has become a hub for creative industries following the BBC’s decision to relocate thousands of jobs there from London. Its successes notwithstanding, however, the benefits of Media City don’t seem to be trickling down: large parts of Salford are among 10 per cent of the most deprived neighbourhoods nationally in terms of income, employment, education, skills and training.

All this points to a simple truth: there can be no assumption that a new hive of economic activity in any sector will automatically produce benefits for local communities. The city-region cannot afford to be agnostic about the kind of economic activity it is seeking to encourage, because the data shows that economic activity does not necessarily translate into tangible benefits for many local people when looking at indices of deprivation.

“Atom Valley would do well to focus […] on manufacturing in critical areas like health care”

Atom Valley would do well to focus less on the big names in global tech innovation and more on manufacturing in critical areas like health care. Unlike the free market and the narrow profit-driven motives of large international companies, health systems across England have new objectives to address social and economic development, reduce health inequalities and to work in close partnership with local government. Moreover, the NHS is currently struggling with supply chain resilience, as well as the pressure to reach net zero by 2045.

It would be a win-win, then, for Atom Valley to work with the new integrated care system in Greater Manchester to capitalise on the steady order book of public procurement opportunities. Why ship huge quantities of single-use consumables from overseas when economic demand could instead be channeled into the creation of innovative local markets? Rather than trying to attract large international companies, the state could use its power to establish and support a wave of local manufacturing, generating productive, secure and well-paid jobs in the process.

“Greater Manchester Combined Authority could emulate and scale pioneering employment interventions”

Greater Manchester also needs a plan to ensure that the jobs being created are targeted towards those who need these opportunities the most. This is something that’s already on Andy Burnham’s radar – who has tried to spearhead the request for an integrated skills system, giving young people a clear line of sight to available opportunities. Atom Valley could amplify this approach to the benefit of the most vulnerable residents. At the same time as supporting the development of existing and new local manufacturing companies, the Greater Manchester Combined Authority could emulate and scale the pioneering employment interventions that are already taking place within the city region.

Atom Valley could prove to be the nuclear option for Greater Manchester’s economic health. And it needs to be. Local economic development practice needs to step up to the plate if we are to truly level up by delivering economic opportunities for all.